MOLDOVA AGRICULTURAL COMPETITIVENESS PROJECT (MAC-P, November 2012- June 2021)
The Project Development Objective is to enhance the competitiveness of the country’s agro-food sector by supporting the modernization of the food safety management system; facilitating market access for farmers; and mainstreaming agro-environmental and sustainable land management practices. The PDO will be achieved through activities aimed at: (i) strengthening country capacity to manage the increasingly complex food safety agenda; (ii) increasing levels of farmer organization and improving post-harvest infrastructure; and (iii) promoting adoption of sustainable land management practices by farmers and ensuring a strengthened response by the authorities to soil degradation challenges.
COMPONENT 1: ENHANCING FOOD SAFETY MANAGEMENT
Sub-component 1.1.: Regulatory and institutional support
Sub-component 1.2.: Technical enhancements for food safety management
COMPONENT 2: ENHANCING MARKET ACCESS POTENTIAL
Sub-component 2.1.: Business development support for productive partnerships
Sub-component 2.2.: Investment support for post-harvest technologies
COMPONENT 3: ENHANCING LAND PRODUCTIVITY THROUGH SUSTAINABLE LAND MANAGEMENT
Sub-component 3.1.: Capacity building forsustainable land management (SLM)
Sub-component 3.2.: Financialsupport for piloting sustainable land management
Sub-component 3.3.: Support for the rehabilitation of shelterbelts
COMPONENT 4: Project management support, M&E
The project will be implemented by the Ministry of Agriculture and Food Industry (components 1 and 2) and the Ministry of Environment (component 3).
Component 1: ENHANCING FOOD SAFETY MANAGEMENT
This component would finance activities aimed at enhancing human, institutional and technical capacity of the country’s food safety management system, as well as ensuring regulatory harmonization with EU requirements. Adoption of EU acquison SPS carries significant implications for state institutions in charge offood safety and quality, producers and consumers. EU regulations in these fields demand some of the highest standards in the world and consequently compliance by Moldova to these rigors wouldentail a lengthy and complex process that requires substantial financial efforts. The component would be structured into two sub-components that would aim to address key priorities identifiedin the framework of DCFTA negotiations related to regulatory and institutional support and technical enhancements of the food safety management institutions.
Componenta 2: ENHANCING MARKET ACCESS POTENTIAL
This component would finance activities aimed at improving marketability and market integration of Moldova’s highvalue agricultural products – specifically in the horticulturalsector – where the country has proven comparative advantages inthe production of fruits and vegetables. The component would address institutional and market access elements of the competitiveness framework presented earlier by supporting government efforts in creating an enabling environment for voluntary farmer productive partnerships (business cooperatives or producer groups), and by assisting them in creating and expanding their asset basefor the application of modern post-harvest technologies. This support is expected to translate into an increased share of quality products that meet safety and quality standards for target markets, and therewith strengthen the sector’s relative competiveness and consequently its income generation potential. The proposed approach recognizes that the ability of Moldova’s horticultural sector to serve increasingly demanding national and regional markets is a function of producers’ ability to organize themselves and to cooperate for purposes of lumping capital and scaling up their operations for post-harvest storage, handling, compliance with food safety requirements, adherence to target market standards, and joint promotion and marketing of produce.
The designof this component relies on the provision of grant-based assistance to producers for business development and investment support in order to overcome current market failures related to: (a) insufficient availability to individual producers of public goodssuch as information, knowledge and business advice on modern post-harvest handling processes, technology and market opportunities; and (b) lack of economies of scale caused by high investmentcosts and inadequate credit facilities for critically necessaryinvestments for which lumping of capital is required. These factors constitute significant disincentives for the emergence of productive partnerships and adequately scaled operations. The project would attenuate them by providing conditional business development and investment support, thus facilitating the emergence of producer groups in the horticulture sector. The major expected externalities from this approach are: (i) the demonstration effects that would set the stage for the creation of a much largernumber of productive partnerships than the project itself can support, in the horticultural sector and beyond; and (ii) policy lessons that could inform public decision making for best approaches to eliminate current market failures mentioned above.
Component 3. ENHANCING LAND PRODUCTIVITY THROUGH SUSTAINABLE LAND MANAGEMENT
This component would finance activities aimed at mainstreaming sustainable land management practices and technologies, and rehabilitation of anti-erosion shelterbelts. As part of the competiveness framework presented earlier, it would support governance and resource endowment/depletion aspects that can increase competitiveness of the agriculture sector by enhancing land productivity. The activities of the component would be aligned along three lines of support: (i) strengthening of human, institutional and technical capacity (both locally and nationally) for the implementation of SLM activities; (ii) financial support in the form of matching investment grants to farmers for piloting theadoption of sustainable land management practices and technologies; and (iii) investment support for the rehabilitation of anti-erosion shelterbelts with the purpose of maintaining and enhancing the productivity of agricultural land. Matching investment grants provided to farmers would attempt to overcome current market failures related to: (a) insufficient public goods such as information and knowledge on the practical application of knowledge-intensive and often innovative practices for sustainable land management; (b) high transaction of information costs that can only be attenuated by a wider availability of demonstrable SLM practices and technologies; and (c) long maturation of investmentsthat are not feasible for private investors, but are positive for the society at large. The major expected externalities from this approach are: (i) the demonstration effects that could catalyse a wider commercial-based application of SLM practices and technologies; and (ii) policy lessons that could inform public decision making for best approaches to mainstreaming such activities.
Component 4. PROJECT MANAGEMENT
The component would support costs associated with project implementation, including operational and consulting costs for fiduciary, component coordination, monitoring and evaluation support to MAFI and MOE.